S&P 500 Gains as Internet Stocks Decline While Oil Rises

Janet Yellen, chair of the U.S. Federal Reserve, arrives to a Joint Economic Committee hearing in Washington, D.C. on May 7, 2014. Photographer: Andrew Harrer/Bloomberg

May 7 (Bloomberg) -- The Standard & Poor’s 500 Index
rebounded from yesterday’s loss even as Internet stocks led
technology shares lower for a second day. Oil rose as U.S. crude
inventories fell; Russian shares and the ruble rallied.

Russian President Vladimir Putin said troops were pulled
back from the Ukrainian border while in the U.S., Federal
Reserve Chair Janet Yellen said the central bank must continue
to spur the economy as indicators for inflation and employment
remain far from policy makers’ goals. The retreat in Internet
stocks came as Alibaba Group Holding Ltd. filed yesterday for
what could be the largest U.S. initial public offering.

“Earnings season has been pretty good,” John Kvantas, a
San Antonio, Texas-based director of equity research USAA
Investments, said in a phone interview. The firm manages $62
billion. “If you get outside those momentum stocks, the market
is not significantly overvalued. You still see very good
companies with decent growth prospects that are not
significantly overvalued.”

Internet Stocks

The S&P 500 fell 0.9 percent yesterday, and dropped as much
as 0.4 percent today to below its average trading level for the
past 50 days before rebounding. Financial shares paced gains
today after disappointing results from American International
Group Inc. dragged the group lower yesterday.

Technology companies in the S&P 500 lost 0.2 percent today
after tumbling 1.2 percent yesterday. Yahoo! Inc. dropped 6.6
percent. Alibaba Group filed for what could become the largest
U.S. IPO ever. Yahoo plans to sell part of its 22.6 percent
stake in the Chinese online marketplace. Groupon Inc. lost 21
percent as its sales and profit projections for the current
quarter trailed some estimates. Twitter sank 3.7 percent after
leading a selloff in Internet shares yesterday with an 18
percent tumble.

Whole Foods Market Inc. tumbled 19 percent for its biggest
decline since 2006. The largest U.S. natural-goods grocer
yesterday posted second-quarter profit that trailed analysts’
estimates as increasing competition from traditional
supermarkets and other organic-food sellers eats into sales.

About 75 percent of companies in the S&P 500 that have
posted results this season have beaten analysts’ earnings
estimates and 52 percent have topped sales projections, data
compiled by Bloomberg show. Some 22 S&P 500 companies, including
Allergan Inc., Duke Energy Corp. and Prudential Financial Inc.,
report earnings today.

Fed Watch

U.S. equities climbed last week, sending the Dow Jones
Industrial Average to a record, after the Fed said the economy
is gaining momentum as consumers spend more.

The central bank is winding down record stimulus as the
world’s largest economy shows signs of rebounding from a first-quarter standstill. At the same time, the Fed repeated that it’s
likely to keep the benchmark interest rate near zero for a
“considerable time” after bond purchases end.

‘Remains Warranted’

“A high degree of monetary accommodation remains
warranted,” Yellen said today in testimony prepared for
delivery to the Joint Economic Committee of Congress. “Many
Americans who want a job are still unemployed,” and inflation
is below the central bank’s 2 percent target, she said.

The Treasury market yield curve steepened after Yellen
tempered expectations for an acceleration of interest-rate
increases. The difference in yields between five- and 30-year
securities increased to about 175 basis points, or 1.75
percentage points, as investors bet moderate growth will prompt
the central bank to stick with forecasts for increases next
year. Benchmark 10-year notes were little changed as the U.S.
sold $24 billion of the securities.

The Stoxx Europe 600 Index was little changed following an
earlier drop after earnings from Societe Generale SA and Fiat
SpA missed estimates. Ten of the 19 industry groups in the Stoxx
600 advanced.

Siemens AG climbed 2.1 percent as Europe’s biggest
engineering company forecast an increase in productivity after
saying it will buy some energy assets from Rolls Royce Holdings
Plc and list its hearing-aid unit.

SocGen

Societe Generale, the second-biggest French bank by market
value, reported a 13 percent decline in profit after writing
down goodwill at its Russian unit. The stock slipped 0.8
percent.

Oil’s advanced help lead the S&P GSCI Index of commodities
up 0.4 percent, even amid declines in 16 of the 24 materials it
tracks.

The MSCI Emerging Markets Index was up 0.1 percent,
recovering from an earlier 0.4 percent slide. South Korea’s
Kospi lost 1 percent, with NCsoft Corp. leading declines by
technology shares, and the won climbed to the highest level
since 2008 versus the dollar as trading resumed following a
four-day weekend.

The Shanghai Composite Index and the Hang Seng China
Enterprises Index of mainland companies listed in Hong Kong both
fell 0.9 percent. A services index from HSBC Holdings Plc and
Markit Economics dropped to 51.4 in April from 51.9 in the
previous month.